Must pay nearly $18 million to production funds
By Steve Faguy
MONTREAL — Bell Canada “misallocated” millions of dollars of funding for Canadian programming and failed to meet its obligations to community television programming by using much of its required funding for community TV on shows that clearly furthered Bell Media’s commercial interests, the CRTC announced in a lengthy (26,632-word) decision rendered on Thursday.
The performance of Bell’s community television was reviewed as part of its Fibe TV licence renewal, the company’s IPTV network in Ontario, Quebec and Atlantic Canada, and as a result of the violations, Bell has been directed to pay $17,924,607 to the Canada Media Fund (80%) and certified independent production funds, and the licences have been renewed for only four years instead of the typical seven.
The CRTC decision highlighted several issues related to Bell’s compliance with its licence obligations which showed the company got creative with its interpretation of regulations. The Commission said Bell’s actions “reflects a broader tendency by the licensee to rely on self-serving practices” with funding that should go to “public service” community TV programming or Canadian production funds.
In a statement to Cartt.ca, Bell said “we are studying the decision” without further comment.
Bell Fibe offers community programming on an on-demand channel called TV1. The regulations require half a community channel’s budget be allocated to “access” programming, that is programming that comes from an independent member of the community who retains creative control over it. The CRTC found Bell complied with that requirement, but it’s the other half of its spending that raised regulatory eyebrows.
From 2014 to 2018, TV1’s list of “local BDU productions” includes several programs that have obvious direct links to programming on Bell Media’s commercial channels, including CTV, Crave, RDS and Vrak. Shows like Amazing Race Canada Auditions, LetterKenny, Let’s Get At’er, Investigating Cardinal and Secrets de Chalet are simply behind-the-scenes documentaries about Bell Media network or specialty TV series, but were classified as local community programming in Quebec and Ontario.
Other programs, like Etalk @ TIFF, Mary’s Big Kitchen Party and The Social: Lunch Dates were essentially spinoffs of CTV shows.
“This would run counter to the Community Television Policy’s key objective of community reflection.” – CRTC 2020-356
“Although the descriptions provided by Bell for each of these programs included explanations as to how they are locally reflective, the explanations still appeared to support the conclusion that, for many of the programs, the main function is to cross-promote Bell Media productions that air on Bell-owned commercial television stations and services rather than provide genuine local reflection of specific communities,” the Commission wrote. “This would run counter to the Community Television Policy’s key objective of community reflection.”
Even more concerning were shows related to professional sports teams that are partly owned by Bell. The program Raptors Open Gym Fast Break, which promised to “go behind the scenes and follow the Raptors players,” was commissioned through the same contract as Raptors Open Gym, a commercial TSN program. Another program, 24CH Le Valet, was produced concurrently with RDS’s 24CH documentary show about the Montreal Canadiens, and both series included “significant fees paid by independent producers or by Bell on behalf of the independent producers to teams from professional sports leagues for the rights for the use of names, trademarks or video content involving the professional sports teams in question,” reads the Commission decision.
The finding raises the question of whether Bell was not only using community television funding to enhance its contracts with commercial programming suppliers, but also supporting the charging of high fees to its own community television service to benefit professional sports teams in which it has an ownership stake.
The Commission acknowledges in its decision “there is no specific policy or regulation” that prevents acquiring community programming from a related independent producer or from paying rights fees to professional sports teams, but it does note concerns about content related to pro sports being counted as community programming have been raised as far back as 2002. The community TV policy explicitly states “the broadcast of programs featuring professional major league sports, produced by companies generally engaged in the production of such programs, does not fulfil the objectives of this policy and will generally not be allowed on the community channel.”
The Commission also expressed concern about the amount of funding going to these types of programs, which it said was “as high as 40%” of the total community channel funding.
“Bell’s significant expenditures on productions whose links to its commercial programming or properties have been prioritized over the genuine reflection of the local community in which those productions are broadcast, as well as its expenditures on other programming that is also meant to appeal to a wider audience than the BDU’s local community, result in an offering that is more akin to a commercial enterprise that promotes Bell’s economic interests than an offering that serves the interests and needs of local communities,” reads the decision.
As a result, the CRTC found Bell in non-compliance with its condition of licence related to community programming and directed it to file a report detailing how it will eliminate this cross-promotional programming and prohibit licensing fees paid to professional sports teams within three months.
The Commission also chided Bell for counting technical expenses, such as production supplies, new cameras, post-production technical services and a “software portal” as direct programming expenses.
“They lie on the edge of what is acceptable and what is not, particularly when considered through the lens of the Community Television Policy.” – CRTC 2020-356
“Although excluding Bell’s expenditures that do not appear to be direct in nature does not bring the licensee’s direct expenditure levels below the required levels, and although those expenditures technically do not run counter to Commission policies and to the regulations, they lie on the edge of what is acceptable and what is not, particularly when considered through the lens of the Community Television Policy,” the CRTC wrote.
However, the issue which resulted in the $18 million in restitution relates to Bell’s redirection of community programming funds to other markets and to its local CTV stations.
Before community channel funding flexibility took effect in 2017, the CRTC found Bell pooled some community TV funding for high-cost productions out of Toronto and Montreal. Bell said it could do this because community channels are allowed to have up to 40% non-local programming. But the CRTC countered that the local programming quota related to exhibition, not funding. It “did not result in an authorization to direct up to 40% of the funding drawn from a specific area towards non-local programming.”
After the CRTC allowed distributors to redirect community channel funding to related commercial stations, Bell shut down TV1 in Toronto and Montreal, redirecting all their required local funding to local CTV stations. But it continued to produce “a significant number” of “community” programs in those cities, using funding from smaller markets, says the decision.
This, the Commission said, was the opposite of what such flexibility was designed to do: help subsidize local television in small markets using BDU revenue from larger ones.
Bell argued the regulations allowed them to do this, that they could redirect funding to a “licensed area” even if it did not have a community TV service, and that such Montreal and Toronto-based programming was “relevant” to smaller markets because people there watched it.
The CRTC didn’t agree, saying “Bell has made an overly literal interpretation of the definition of ‘community programming’,” and that the meaning of the regulations is clear.
Bell said it would discontinue the practice, and the CRTC said if a distributor shuts down a community channel in a market, that market is not allowed to receive redirected community TV funding.
Another problem relates to the fact Bell had special permission to double its community TV allocation to operate services in both official languages in several markets, including Ottawa, Montreal and Quebec City. After the Commission allowed the redirection of community TV funding to commercial stations — 100% in large markets and 50% in smaller ones — Bell believed that meant it could reallocate up to 3% and 1.5%, respectively, of gross revenues from those markets to local CTV newsrooms, double what distributors without the special conditions could do.
The CRTC noted Bell’s condition of licence explicitly states the double allocation can only be used for community channels, so its authorization to double its community TV deduction and the new authorization to redirect community TV funding to local newsrooms are in fact mutually exclusive.
Besides, the Commission noted, the practice would fly in the face of the very reason the additional funding was allowed in the first place, to benefit official language minority communities in those areas. At the time, Bell did not own any French-language TV stations in Ottawa, nor English-language stations in Quebec City.
Furthermore, “the Commission notes that other licensees with this authorization appear to have not had issues interpreting their conditions of licence correctly.”
In all, the CRTC calculates Bell “has misallocated $35,869,215.” But it is requiring Bell to only repay half of that ($17,924,607), which is the shortfall it would have had if it had the same deduction limits as other BDUs. Since that money would have otherwise gone to production funds, the CRTC is directing Bell to pay at least 80% to the Canada Media Fund and the rest to certified independent production funds by the end of this licence term.
“The Commission considers that the amounts to be paid to the CMF and CIPFs will serve to remedy the harm caused to the system,” the Commission wrote, though it acknowledged that the additional funding to local CTV newsrooms “mitigated to some extent” the damage.
The Commission allowed Bell to continue to double its community TV contributions for Ottawa and Quebec City, but the licences only allow Bell to redirect majority-language funding for local news, so the French-language community in Ottawa and English-language community in Quebec City will not have any funds deducted from their community channels.
The compliance issues Bell was faced with, and Telus and Videotron before it in separate proceedings, led Bell and a group of independent broadcasters to call for a review of the CRTC’s community television policy.
“Given the numerous rounds of questions from the Commission, it has become clear to us that the Commission’s intentions have not always been properly reflected in its stated policies.” – Bell Canada
“Given the numerous rounds of questions from the Commission, it has become clear to us that the Commission’s intentions have not always been properly reflected in its stated policies,” Bell wrote in its application. The Independent Broadcast Group, representing independent broadcasters including APTN, Channel Zero, Ethnic Channels Group, Hollywood Suite and Stingray, said Bell was exploiting “apparent loopholes” in policy and agreed that a review was necessary “to determine how widespread the practices disclosed in Bell’s renewal application are among (vertically integrated) BDUs.”
However, the Commission said such a review would not be retroactive. Instead, it dealt with compliance issues directly with licensees and gave them proper guidance going forward on how to interpret the policy. A full review of its community TV policy was “not necessary at this time,” it wrote.
Meanwhile, the CRTC denied Bell’s request to allow it to operate zone-based community services in six areas, including one comprising all of its service areas in New Brunswick. It said Bell’s justification was “vague” and combining an entire province would be “a step away from the very nature of community television.”
Other aspects of the decision:
- Bell neglected to seek a licence amendment that would have allowed it to include a 0.3% Independent Local News Fund contribution from its 5% overall Canadian programming contribution. It’s a technical matter, but the CRTC reminded Bell that it “must strictly adhere to its regulatory obligations at all times and that it is not at liberty to interpret its conditions of licence at its own discretion and convenience.”
- The Commission allowed Saint-Jérôme to be merged with the Montreal service area.
- It suspended conditions of licence that duplicate the Wholesale Code while the code remains in effect (Bell maintains a condition of licence requiring it to abide by the code).
- It allowed Bell to not have to carry both OMNI stations and the mandatory OMNI Regional service where they would have identical programming (Shaw and Videotron have similar allowances).
- Conditions related to set-top box ratings measurement are maintained while a separate application for amendments is still being considered.
Bell’s new TV distribution licences covering 31 markets in Ontario, Quebec, New Brunswick, Newfoundland and Labrador and Nova Scotia will be in effect from Nov. 1, 2020 to Aug. 31, 2024.
